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Essays on child labor and poverty in the context of a conditional cash transfer program in Nicaragua

ESSAYS ON CHILD LABOR AND POVERTY IN THE CONTEXT OF A CONDITIONAL CASH TRANSFER PROGRAM IN NICARAGUA
by Ximena V. Del Carpio
___________________________________________________________
A Dissertation Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY
(POLITICAL ECONOMY AND PUBLIC POLICY)
May 2010
Copyright 2010 Ximena V. Del Carpio

This dissertation presents the political economy dimension of conditional cash transfer programs. It also delves into the evaluation of one such program implemented in rural Nicaragua and measures the impact of the program on poor households, specifically on how the program affects children's work. The analysis throughout this dissertation focuses on the impacts of transfer programs on beneficiary well being as well as beneficiary behavior toward their children. In particular, the focus is on the decision of adults to engage children in various labor activities while receiving monetary benefits from the program.; In the face of chronic poverty and negative economic shocks, people resort to different strategies to cope and survive. Those fortunate enough to have some physical assets use them in times of need and, if necessary, deplete them. Most people attempt to expand their household income by increasing adult participation in the labor force and by having children provide work inside or outside the house. While these strategies may be indispensable in the short run, they may have negative consequences in the long run. Asset depletion puts the family in a vulnerable situation in the future. Similarly, some forms of child labor may jeopardize the children's ability to acquire both the educational skills and physical strength to become productive and well-functioning adults.; Governments can help families caught in dire situations with programs that lift them above a minimum living standard. Among the battery of social protection programs used to target the poor are conditional cash transfers (CCT). Although CCTs represent a small portion of the safety net toolkit they become one of the preferred poverty alleviation mechanisms. Preference for CCTs stem from their potential to increase household asset endowments directly by supplementing incomes while fostering human capital investments through various conditionalities.; Many countries around the world, particularly in Latin America, have adopted traditional CCT programs. Few countries have experimented with alternative CCT models that add components beyond health, nutrition, and education. In general CCTs seek to improve risk-coping and poverty management mechanisms so that households do not have to make disinvestments that can harm their future potential. Traditional CCT programs have been shown to limit the impact of shocks by decreasing the need of selling assets, pulling children out of school, increasing children's labor participation, and reducing nutritional intake of household members. The evidence of the impact of traditional CCT programs is overwhelmingly positive, especially on human development outcomes. However, programs range in size, modalities, and designs and there are clear limitations that must be noted.; Questions remain whether CCTs are feasible and effective in difficult contexts; more specifically, in places with low implementation capacities and low political support. Additionally, it is also unclear whether operational capacities of poorer countries are too limited so that they cannot appropriately target the needy and/or implement a program in a manner that will lead to measurable improvements. For example, it is unclear how CCTs can be implemented in places where social services, such as education and health, are weak or not available. Similarly, the exportability of these projects also remains unclear. One of the largest CCT in the world is Brazil’s Bolsa Familia; its design and success was unique in Brazil and copied in nearby countries in Latin America (such as Mexico, Nicaragua, Jamaica, and Honduras). However, the context in other regions, and poorer countries in Latin America, differs drastically, making it difficult to ascertain the replicability of the program and its success.; Another area of research still unclear in the literature has to do with the sustainability of impacts. Specifically, the effects of CCT programs on the next generation of children living in benefited households. Unfortunately, not enough time has passed from the first generation of CCTs to assess the sustainability of program impacts and their effects. For example, Mexico’s Progresa (or Oportunidades) is still relatively young (less than 10 years) to show long-term impacts and sustainability of change (Parker et al. 2007).; The first chapter in this dissertation presents an overview of the strengths and weaknesses of CCTs, explores the political economy behind their feasibility and their adoption, and studies their implementation experiences in various contexts. The second part of the first chapter introduces a CCT program, designed for a very poor and vulnerable context, using an alternative approach suitable to the development needs and reality of the region. The program presented in this chapter was implemented in the north-central region of Nicaragua. Its design includes traditional CCT components—nutrition, health, and education—as well as components aimed to improve the employability of young adults and diversify the household’s income source. The objective of introducing this program in this chapter is twofold, first, to qualitatively explore the political economy implications of designing, implementing, and evaluating a customized CCT program; and second, to illustrate certain features of the program—mainly its design and evaluability—that can help improve the design of future projects elsewhere.; The second chapter investigates the relationship of household income with child labor. The chapter presents a simple model that relates child labor to household income, beneficiary preferences, and production technology. The chapter also presents an empirical application to test this relationship, expanding the analysis by stratifying the sample by age and gender. Lastly, the chapter investigates the effect of the program on child labor, dividing labor into two types -- physically demanding labor and non-physical labor -- to reveal the impact of the program.; The third chapter analyzes changes in the allocation of child labor within households in reaction to the CCT program. The chapter starts by formulating a simple model that investigates how children and household characteristics interact to render a specific distribution of tasks among children. Then, the chapter analyzes the data with the purpose of identifying the characteristics that determine the allocation of child labor in the sample of households prior to the implementation of the program. Finally, the chapter evaluates whether the exogenous shocks created by the CCT program resulted in compensation or reinforcement of pre-program differences in child labor allocation and human capital accumulation.; All chapters are motivated through the relevant literature in order to place the chapter into the wider literature and highlight the contribution of this work. The second and third chapters also formulate theoretical models to clarify and motivate basic relationships and offer policy implications and ideas for future research. An essential component of this dissertation is its original data set. Data did not come from secondary sources; it was obtained directly from my work and that of a team of researchers. The data collection exercise was conducted through several field visits that resulted in a two-year panel (2005‐2006) of randomly targeted households, providing detailed information on household characteristics--such as assets, income, consumption patterns -- and individual education and labor outcomes, including child labor.

ESSAYS ON CHILD LABOR AND POVERTY IN THE CONTEXT OF A CONDITIONAL CASH TRANSFER PROGRAM IN NICARAGUA
by Ximena V. Del Carpio
___________________________________________________________
A Dissertation Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY
(POLITICAL ECONOMY AND PUBLIC POLICY)
May 2010
Copyright 2010 Ximena V. Del Carpio